http://www.iht.com/articles/2007/05/17/business/trade.php
China grapples with food contamination credibility crisis By David Barboza Published: May 17, 2007 SHANGHAI: Weeks after tainted Chinese pet food ingredients killed and sickened thousands of dogs and cats in the United States, China faced growing international pressure to prove that its food exports were safe to eat. But simmering beneath the surface is a thornier problem that worries Chinese officials: how do they assure the world that this is not a nation of counterfeits and that "Made in China" means well-made? Already, the largest pet food recall in U.S. history has heightened global fears about the quality and safety of Chinese agricultural goods. Now evidence is mounting that China has also exported counterfeit drug ingredients that could undermine the credibility of another of its booming exports. "This isn't an international crisis yet, but if they don't do something about it quickly, it will be," says David Zweig, a China specialist who teaches at the Hong Kong University of Science & Technology. "The question is whether it spills over and 'Made in China' becomes known as 'Buyer Beware.' " With contamination spreading to meat and fish supplies, some of the biggest U.S. food companies are now lobbying Washington to pressure China to increase its food safety measures. Kraft, Kellogg and Cargill and other food companies have said that they were reviewing their food safety standards and upgrading equipment. Their executives worry that another such safety scare involving China could set off a consumer backlash and reverse a trend that has seen big food makers grow increasingly dependent on processed ingredients from developing countries. Consumers have complained to pet food makers that they want goods that are free of any ingredients from China, according to the Pet Food Institute. "This is beyond concern," said a long-time U.S. food industry official, who spoke on the condition of anonymity because of the sensitivity of the subject. "All the major food manufacturers are terrified. They're worried this could lead to the cutting off of imports from China. And where do you think we get 80 percent of our apple juice concentrate?" At stake for China is more than $30 billion a year in food and drug exports to Asia, North America and Europe. Experts say that doubts about the quality of Chinese food shipments and China's longstanding reputation for counterfeit goods could also affect other exports if buyers begin to find safety shortfalls or other product faults. Two weeks ago, Wal-Mart Stores announced a recall of baby bibs made in China after some of those bibs tested positive for high levels of lead. The overall scare may prompt important changes in China. The former head of the Chinese food and drug regulator is now standing trial in Beijing for accepting bribes and failing to curb a scandalous market in fake and dangerous medicines. Few trade experts say they believe that the Chinese export boom is going to slow any time soon. But they say that certain industries could face greater challenges because of growing concerns about counterfeiting and fake supplies. One reason is the pet food case, where U.S. regulators suspect that two Chinese companies intentionally mixed an industrial chemical called melamine in with wheat flour to artificially increase protein readings. "We're now learning some of the dirty secrets behind this fast-growing economy," says Wang Fei Ling, a professor of international affairs at the Georgia Institute of Technology in Atlanta. "And the dirty secret is they're cutting corners in making things." In the aftermath of the pet food scare, which may have caused as many as 4,000 animal deaths, regulators around the world are stepping up inspections of Chinese agricultural goods and even blocking some imports. In Europe, food safety authorities are testing all Chinese protein imports for melamine. One of the largest South Korean food and feed makers, CJ Foods, said last week that it was recalling 42 tons of wheat gluten from China even though the products had not tested positive for melamine. "The major effect of this seems to me that the Chinese have been alerted that they should get their house in order," M.D. Merbis, an economist at the Center for World Food Studies in Amsterdam, said. Trying to restore confidence in its agricultural exports, China promised earlier this month to overhaul its food safety system and to upgrade its export controls. Last week, China found two Chinese companies guilty of exporting melamine-contaminated vegetable protein to the United States. The fallout is affecting a range of Chinese agricultural exporters. "A Spanish company came to visit us and was planning to buy our product," Sun Hong, chief executive of Sanfu Biochemical Company, a rice protein maker in Hangzhou, said. "We were going to strike a deal at the end of the month. But after what happened in the U.S., they haven't even replied to our e-mail yet." While China is not particularly well known for its food exports, its shipments of vegetables and seafood have been soaring in recent years. China is also pressing the United States and the European Union to accept imports of Chinese poultry products, a move that is being opposed by U.S. and European poultry farmers. To restore confidence in its food exports, experts say, China needs to confront the issue and not be seen as covering up or delaying the release of information, which is what appeared to happen when Severe Acute Respiratory Disease and bird flu reached the country. The pet food case, they say, is much the same. In the days following the U.S. pet food recall, for instance, China denied having shipped any wheat gluten to the United States. One official even said that melamine could not have harmed pets. Only after an international storm surrounded the case in mid-April, and a U.S. senator publicly rebuked China for its response, did China fully cooperate with U.S. regulators. Now, in what appears to be a sharp turnabout, China has banned melamine from food and feed proteins and announced nationwide inspections. Still, doubts remain about the ability of Beijing to tackle what many experts see as rampant fraud in its booming economy, and a culture of counterfeiting. This is a country, after all, where lax regulation and a weak legal system have allowed unscrupulous entrepreneurs to blend industrial fluids into alcoholic beverages, to sell fake baby formula and to form counterfeiting factories that pump out everything from fake car parts to copycat cigarettes. Few things, though, are as dangerous as fake food and drugs. In Panama, more than 100 people have died in recent years by consuming counterfeit drug ingredients that were manufactured in a Chinese factory. The problems here are compounded by the lack of press freedoms that keep the public in the dark about the food and drug safety woes of the country, experts say. Most people in China are still unaware of the pet food scandal because the story has largely been ignored by the Chinese media. Several Chinese editors contacted in recent weeks said that they were ordered by the government propaganda department not to report on the case. 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